Is OffersBy.Me Better Than Groupon? Probably (Especially If You Are A Business)

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Adam Goldberg did quite a bit of research before soft-launching OffersBy.me last spring. The ex-Oracle, ex-Google entrepreneur and ClearSaleing co-founder knows a thing or two about ad analytics and has taken this experience with him in his latest startup called OffersBy.me, which is now officially “launched” and recently popped up on my radar.

I’ll be honest, that I am not much of a couponer/Grouponer — I am too lazy even for that — however Adam’s concept piqued my interest.

What is OffersBy.me? It’s a new website/app offering discounts for goods and services. And although it is currently only serving up offers in the company’s hometown of Columbus, Ohio (expansion is planned) it has some cool features that set it apart from behemoths like Groupon or LivingSocial.

Instead of consumers receiving a random deal of the day or searching through large clusters of varied deals, OffersBy.me lets customers offer up how much they are willing to spend for a particular good or service and they are then connected with businesses and coupons that match their spending intent. That’s a pretty good idea.

In fact, Goldberg almost seems to have constructed his business model around some of the weaknesses in other online coupon services.

What are their weaknesses? According to research by Goldberg:

Groupon is not precise. Groupon’s carpet-bombing approach is sending 400,000 emails in Columbus alone. This leads to a 1/1000 redemption rate

Groupon is a one-size-fits-all operation taking 50% (of the 50% off) leaving businesses with approximately 25%

Businesses only getting 25% of that profit means they need to make offers in scale to make up the difference, however they can’t control the timing of those offers (for example, people may try to redeem restaurant offers on busy nights when the business doesn’t really need the traffic those offers drive).

The optics of even putting offers out could damage brand-image for some businesses.

So really, Groupon is good for consumers, but not always good for businesses. OffersBy.me tries to rectify this by creating a situation that is good for both and pretty much addresses each of the issues above.

Precision – Instead of a coupon service broadcasting an offer blindly, OffersBy.me lets users “broadcast their intention to buy” (Goldberg quotes Doc Searls here). Users enter how much they are willing to spend and only sign up for the kinds of offers that interest them. Seems simple enough. Is Groupon really not letting you do this?

The Financials – OffersBy.me is currently free for businesses to use, for now, and will take 10% of an offer’s value only when a consumer redeems it. For example, let’s say a consumer makes an offer request by saying, “I am willing to spend $50 on a haircut.” That consumer receives an offer from a hair salon that says, “Take $10 off your bill when you spend $50 or more.” If that consumer redeems that offer at that hair salon, OfferBy.me would charge the salon $5 (10% * $50 offer value). That consumer’s final bill may have been $75. Therefore, in that example the effective rate would actually be only 6.6%.

Control – Timing and location of redemption can all be controlled by the business. For example, a business with multiple locations can set the redemption for only specific locations and at “off peak” times to incentivize customers to come in at slower business times and thus optimize revenue.

Brand Perception – Because consumers set the thresholds around how much they want to spend and businesses set the thresholds around how much they are willing to offer, Goldberg contends this division keeps from “cheapening” brands because higher priced packages won’t be visible to consumers looking for bargain basement prices. In this way, coupon offers won’t affect brands trying to maintain an exclusive image. They can stay in pricing brackets that are a little more, well…exclusive.

Analytics – There are analytics built into the system for businesses, so they can track how well their offers are working.

However, there are some hurdles.You do have to be a member of the service to see the offers. It’s not a long process to signup (and you can use Facebook connect if you want), but is more info at once than Groupon requires.

And their site could benefit from some “required field” call outs and form validation. I tried to skip some of the signup form sections (as none were marked “required”) and the form simply did not submit. However there was no messaging indicating which fields were causing the problem — turns out it was the birthday field. But once you get logged in, it is fairly intuitive and works like you would expect.

I should also mention that redemption only happens via mobile device. You can sign up at either the desktop site or the mobile app, but you will need your smartphone to redeem offers at locations. The app is also location-aware which aids in verifying the offers are being redeemed at the correct place.

As lazy as I am about coupons, I might actually use this service and while it seems like Goldberg has really created this service for businesses, I don’t think consumers are getting sacrificed in the process. He’s aiming to create a win/win situation for consumers and businesses and he may have actually done it.

It will be interesting to see if this startup gathers steam in its first local market and can expand into others, because it seems to me that businesses could get on board with this concept and possibly avoid Groupon horror stories like this one or that one.